U.S. accuses pair of stealing secrets, spying on GE to aid China

WASHINGTON (Reuters) - A former engineer and a Chinese businessman have been charged with economic espionage and conspiring to steal trade secrets from General Electric Co to benefit China, according to an indictment unsealed by the U.S. Justice Department on Tuesday.

Xiaoqing Zheng, formerly an engineer at GE, was previously charged by the Justice Department in August in connection with the alleged theft.

The indictment unsealed on Tuesday against the former engineer and Chinese businessman Zhaoxi Zhang marks the first time that the U.S. government has formally alleged that the scheme was carried out to benefit China, and that the Chinese government provided "financial and other support."

The 14-count indictment against the pair charges that Zheng, who worked at GE Power & Water in Schenectady, New York, stole multiple electronic files containing details about design models, engineering drawings and other specifications related to the company's gas and steam turbines.

Prosecutors say he emailed the files to Zhang, who was located in China.

GE said in a statement it has "been in close cooperation with the FBI and the U.S. Attorney’s Office for some time on this matter. At GE, we aggressively protect and defend our intellectual property and have strict processes in place for identifying these issues and partnering with law enforcement."

The two men allegedly used the stolen information to advance their own business interests in two turbine research and development companies - Liaoning Tianyi Aviation Technology Co Ltd and Nanjing Tianyi Avi Tech Co Ltd.

The indictment also says that Zheng and Zhang knew the trade secrets would benefit the People’s Republic of China.

The indictment adds that the pair received financial and other support from the Chinese government through those two companies, and they coordinated with Chinese government officials.

Zheng and Zhang were formally indicted on April 18.

Zheng was arraigned on Tuesday and pleaded not guilty. He was allowed to remain free on bond. A jury trial has been set for June 24 in Albany, New York. Zhang was believed to be in China, the Justice Department said.

(Reporting by Sarah N. Lynch and David Shepardson; additional reporting by Makini Brice)

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